What is a promissory note? Author: Harold Averkamp, CPA, MBA Definition of Promissory Note A promissory note is a written promise to pay an amount of money by a specified date (or perhaps on demand). The maker of the...
What is a promissory note? Author: Harold Averkamp, CPA, MBA Definition of Promissory Note A promissory note is a written promise to pay an amount of money by a specified date (or perhaps on demand). The maker of the...
A formal, written promise to pay interest and to repay the principal amount.
promissory note is both of the following: It is a note payable for the borrower who reports the note on its balance sheet as a liability It is a note receivable for the lender who reports the note on its balance sheet...
What is notes receivable? Author: Harold Averkamp, CPA, MBA Definition of Notes Receivable Notes receivable is an asset of a company, bank or other organization that holds a written promissory note from another party....
and it is clearly shown or reported as a separate cost. Examples of Implicit Costs and Explicit Costs Let’s assume that a company gives a promissory note for $10,000 to a seller of a unique used machine for which the...
be reported on the company’s balance sheet as either a current liability or a non-current (or long-term) liability. Examples of Creditors Some creditors, such as banks and other lenders, have lent money to the company...
of the current liability account containing the amounts owed for vendor invoices and other bills that have been approved but not yet paid. The normal balance in Accounts Payable is a credit balance. Amounts owed which...
. This means that the asset’s cost is the cash amount plus the note’s present value at time that the asset is purchased. To illustrate this, let’s assume that equipment is purchased by giving $50,000 of cash plus...
This current liability account will show the amount a company owes for items or services purchased on credit and for which there was not a promissory note. This account is often referred to as trade payables (as opposed...
An asset representing the right to receive the principal amount contained in a written promissory note. Principal that is to be received within one year of the balance sheet date is reported as a current asset. Any...
of 1 factor for 12%? PV Of 1 Factor For 10% Right! PV Of 1 Factor For 12% Wrong. 10. You can determine the number of periods (n) in a present value calculation, if you know the future amount, the present value, and the...
(PVOA) factors are larger? PVOA Factors For 10% Right! PVOA Factors For 12% Wrong. 10. You can determine the number of payments (n) in an ordinary annuity, if you know the amount of each payment, the present value of...
Our Explanation of the Balance Sheet provides you with a basic understanding of a corporation's balance sheet (or statement of financial position). You will gain insights regarding the assets, liabilities, and...
How do you record an asset that was partially financed? Author: Harold Averkamp, CPA, MBA Example of Recording an Asset that was Partially Financed Assume that your company purchased a car for $10,000 by paying cash of...
Our Explanation of Accounts Payable provides insights on the bill paying process in a large company. Included are discussions of the three-way match, early payment discounts, end of period accruals, and more.
Since our Explanation of Cash Flow Statement illustrates how the amounts are determined, you will get a better understanding of this very important financial statement. No longer will you look at only the income...
Our Explanation of Present Value of a Single Amount discusses the time value of money and the need to discount future amounts to the time of an investment or other transaction. The present value of 1 table is used to...
Our Explanation of Present Value of an Ordinary Annuity uses the appropriate present value factors for discounting a stream of equal cash amounts occurring at equal time intervals. An important feature is the use of loan...
Our Explanation of Accounting Basics uses a simple story to introduce important accounting concepts and terminology. It illustrates how transactions will be included in a company's financial statements.
Our Explanation of Present Value of a Single Amount discusses the time value of money and the need to discount future amounts to the time of an investment or other transaction. The present value of 1 table is used to...
merchandise has been received but not the vendor's invoice? What is the accrual method? What is a promissory note? What is a deferred cost? What is the allowance method? How many years is the appropriate time for...
Our Explanation of Accounting Basics uses a simple story to introduce important accounting concepts and terminology. It illustrates how transactions will be included in a company's financial statements.
Our Explanation of Adjusting Entries gives you a process and an understanding of how to make the adjusting entries in order to have an accurate balance sheet and income statement. Eight examples including T-accounts for...
Our Explanation of Debits and Credits describes the reasons why various accounts are debited and/or credited. For the examples we provide the logic, use T-accounts for a clearer understanding, and the appropriate general...
Our Explanation of Accounting Equation (or bookkeeping equation) illustrates how the double-entry system keeps the accounting equation in balance. You will see how the revenues and expenses on the income statement are...
Our Explanation of Accounting Equation (or bookkeeping equation) illustrates how the double-entry system keeps the accounting equation in balance. You will see how the revenues and expenses on the income statement are...
Our Explanation of Accounting Basics uses a simple story to introduce important accounting concepts and terminology. It illustrates how transactions will be included in a company's financial statements.
are the required financial statements? What is the accounts receivable collection period? What is a promissory note? What is the book value per share of stock? What is a deferred cost? What is other comprehensive...
Our Explanation of the Balance Sheet provides you with a basic understanding of a corporation's balance sheet (or statement of financial position). You will gain insights regarding the assets, liabilities, and...
liability account? Is an entry made for outstanding checks when preparing a bank reconciliation? What is the accounting entry when an order is received? Why isn't land depreciated? What is the employer matching of...
Our Explanation of Debits and Credits describes the reasons why various accounts are debited and/or credited. For the examples we provide the logic, use T-accounts for a clearer understanding, and the appropriate general...
Expense account reports the amounts of supplies that were used during the time interval indicated in the heading of the income statement. This current liability account will show the amount a company owes for items or...
Our Explanation of Payroll Accounting discusses the taxes and benefits which are withheld from employees' pay as well as the taxes and benefits that are expenses for the employers. Also provided are examples of the...
What is Notes Payable? Author: Harold Averkamp, CPA, MBA Definition of Notes Payable In accounting, Notes Payable is a general ledger liability account in which a company records the face amounts of the promissory notes...
Where is interest on a note payable reported on the cash flow statement? Author: Harold Averkamp, CPA, MBA Definition of Interest on a Note Payable The interest on a note payable is reported on the income statement as...
How do you record the interest that is unpaid on a note payable? Author: Harold Averkamp, CPA, MBA Definition of Interest Unpaid on Note Payable Interest that has occurred, but has not been paid as of a balance sheet...
What is the difference between a note payable and a bond payable? Author: Harold Averkamp, CPA, MBA Definition of Note Payable and Bond Payable For accounting purposes, a note payable and a bond payable have the...
Federal government securities with a fixed interest rate and maturing in 10 years or less.
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